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Dell says Internet integration key to business success

Without using the Internet's potential--for everything from communication with employees to online purchasing--companies will have a hard time competing, the Michael Dell says.

AUSTIN, Texas--Dell Computer CEO Michael Dell today proposed a new means for measuring companies' financial health.

In his keynote address at the Dell DirectConnect conference here, Dell proposed a new interpretation of ROIC, which typically refers to "return on investment capital," a fundamental measure for gauging a company's financial health. But with the pervasiveness of the Internet and the fundamental way it changes business, Dell suggested a new definition as the "return on infrastructure computing."

"It is now mission critical to integrate the Internet into business," Dell said. "The Internet is causing change so pervasive...the more companies integrate the Internet into their businesses, the more they are successful."

In a Dell-commissioned study conducted by the University of Texas, businesses rated poorly in their use of the Internet. While 74 percent of companies offered basic information online, only 55 percent provided online ordering, 41 percent notified about orders received, and 29 percent offered order status information.

"I give business a C-minus on Internet integration," Dell said.

Dell said his company's return on infrastructure computing rose to 240 percent in the last quarter, from 30 percent four years ago.

Without using the Internet's potential--for everything from communication with employees to online procurement--companies "will lag behind competitors in performance and efficiency," Dell said.

"The larger the company is, the more it has to gain by integrating the Internet into its business," Dell said.

Dell also emphasized the importance of collaboration, saying this is one reason the company is investing in wireless products, such as the Latitude C300 and C800 notebooks unveiled today.

"Wireless is a key way we believe for employees to access (information), freeing them from their desks and the wires tying them to their desks," Dell said.

Based on analyst projections, 65 percent of global companies "will extend critical access to wireless by 2004," he said.

In terms of Dell's business, 25 percent of notebooks sold to K-12 schools this year contained hardware for connecting to networks and the Internet using wireless networking.

The Round Rock, Texas, company earlier this year said it would become a major supplier to Internet infrastructure, using its own success selling on the Web. Dell sells about $50 million worth of products a day using its Web site, which averages about 50 million hits a day.

In an effort to boost its use of the Internet, the company launched for better managing its supply chain, Dell said. The Web-based tool gives Dell and its part suppliers real-time access to pending PC orders and component availability.

Measurement is done in periods of two hours, giving component suppliers access to pending Dell system orders. The online system, which completely eliminates paper and fax transactions, has reduced inventory levels from 13 hours to seven hours, Dell said.

The company hopes to realize $15 million in savings during the first six months of operation and $150 million by 2003. The Web system is also seen as crucial to better managing components during a period of persistent industry shortages.

Touting Dell's server products over competing systems from Sun Microsystems, Dell demonstrated how growing companies could easily bulk up to meet Internet demand.

The stiff but jovial Dell poked fun at a product manager making a mock Inspiron 3800 notebook purchase for his wife's birthday.

Dell commented on his color choice. "Tahoe Blue, that's a pretty popular color. You might add some flowers too...speaking from some experience."